A financial advisor can generally help make decisions regarding what should be done with money. These may include investments or other monetary options. However, remember that the term financial advisor is a catch-all for a wide variety of individuals who provide a wide variety of financial services. There are many methods of managing money, therefore there are many designations within the realm of financial advisors. As a finance professional, you may be lost in the vast sea of financial acronyms. Read on to discover types of financial advisor certifications and credentials.
Certified Financial Planner
Certified financial planners (CFPs) display one type of financial advisor certification, and one of the most widespread. Requirements set by the Certified Financial Planner Board of Standards, Inc., otherwise known as the CFP Board, bind CFP’s. Acquiring CFP certification takes four steps: education, examination, experience, and ethics. Candidates need a combined 1,000 hours of coursework and exams, as well as a bachelor’s degree in financial planning. Ethically, applicants need to meet the Fitness Standards for Candidates and Registrants and promise to follow the Rules of Conduct. The client’s interests being put first demonstrates a tenet of the Rules of Conduct. Additionally, CFPs must be able to work independently, so at least three years of financial planning experience is required before holding the title. However, CFPs are just the tip of the iceberg when it comes to financial advisor credentials.
Chartered Financial Consultant
Chartered financial consultants (ChFCs) present another type of financial advisor certification held by many finance professionals. The designation was created as an alternative to CFP certification. ChFC programs offer specializations beyond the scope of CFPs. More specific, niche needs are the basis for this certification. For example, financial planning for those planning a marriage, protecting a divorce process, or starting a business. The American College of Financial Services requires four months of study and testing for this credential. ChFCs are just one of the many types of financial advisor certifications.
Chartered Financial Analyst
Chartered financial analysts (CFAs) demonstrate an additional type of financial advisor credential. The CFA Institute bestows this globally-recognized designation. Its purpose is to measure and certify the integrity and competence of financial analysts. Candidates must have a four year college degree, or four years of professional work experience. Additionally, CFA candidates are required to have international passports. The CFA Program requires approximately 1,000 hours of study over four years, as well as three exams. Fewer than 1 in 5 applicants pass all three levels. CFAs are also one of the most widespread financial advisor certifications.
Chartered Investment Counselor
Chartered investment counselors (CICs) present a financial advisor designation meant to be the next level above CFAs. The Investment Advisor Association (IAA) created this title in 1975, and it recognizes the special qualities of persons employed by IAA firms. Candidates must already be CFAs. Plus, they need a minimum five years’ experience in investment counseling and portfolio management. Additionally, they must be employed by an IAA firm, provide work and character references, endorse the IAAs standards, and provide ethical information. Surely, CIC is the financial advisor credential requiring the most training and experience.
Chartered Life Underwriter
Chartered life underwriters (CLUs) display financial advisors who specialize in insurance. In addition to being insurance experts, they also come equipped with basic knowledge of financial and estate planning. Candidates need to take eight college courses and have three years of business or financial experience. A CLU should be able to counsel on mitigating risk for both businesses and individuals by the end of their program. Remember that these financial experts deal in insurance, and therefore may be incentivized to sell their clients the largest policies they can. CLUs are but one of the myriad of designations out there for financial advisors.
The term “financial advisor” is pretty general, and it encompasses a multitude of different certifications and specializations. One example is the CFP certification, which requires rigorous training as well as ethical conduct. Another is the ChFC credential, which is designed for more niche uses than the CFP. Third, the CFA certification requires even more rigorous training, integrity, and competence. CICs are the next step above CFAs and deal mainly with investing for large firms. Finally, CLUs specialize in insurance and are able to take care of your financial, estate, and insurance needs. These are just 5 financial advisor credentials and certifications found within the vast sea of financial planning.